Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Heidrick & Struggles 2024 Q1 Earnings Conference Call. [Operator Instructions]. Thank you. I would now like to turn the conference over to Suzanne Rosenberg, VP for Investor Relations. You may begin. .

Thank you, and welcome to our 2024 first quarter conference call. Joining me today is our CEO, Tom Monahan and CFO, Mark Harris. We posted our accompanying slides on the IR homepage of our website at heidrick.com, and we encourage you to view these slides for additional context.

Please note that in the materials presented today, we may refer to non-GAAP financial measures that we believe provide additional insight into underlying results. Reconciliations between these non-GAAP financial measures and the most comparable GAAP measures may be found in the earnings press release.

Also in our remarks, we may make certain forward-looking statements. We ask that you please refer to the safe harbor language also included in today's press release. Tom, I'll now turn the call over to you. .

Thank you, Suzanne. Good afternoon, everyone, and thanks for joining us today. I'm incredibly excited to lead Heidrick & Struggles forward and build upon 71 years of impact.

Client organizations are navigating a world of continued economic volatility and geopolitical complexity more than ever before, driving great corporate performance requires discovering, accessing, evaluating and enabling exceptional leadership.

The urgency and importance of this need for companies in every industry around the world makes for an ever-expanding addressable market. In this work, I'm also very pleased to be teaming with Tom Murrin his new role as President, in addition to his continued oversight of global executive search.

Tom and I have navigated the early onslaught of 2 Toms jokes effectively and are working quickly to get the company positioned for sustained growth and impact. Beyond sharing a first name, Tom and I share a far more important attribute. We both began our Heidrick journey as clients, and we bring first-hand understanding of the client's perspective.

We are committed to leveraging this experience with the unmatched expertise of our people to create what we are calling client-led growth. Together with our talented executive team, we are strongly positioned to create long-term shareholder value.

Today, we appreciate the opportunity to bring you up to speed in the current performance of our business and the opportunities we see for greater growth, profitability and impact in the future. I'll kick off the call with an overview of our first quarter performance.

Next, I'll touch on some themes and observations as well as our priorities to continue growing the scale and overall impact of our firm. Mark will then provide a more detailed discussion of our financial results and outlook for the second quarter. We'll then open the call for your questions. Let me start with financial performance.

Our clients continue to face a complex operating environment, which is likely to be the new normal across industries. While this creates a challenging environment for our clients to operate in, it also creates a permanently volatile world where the lots are ever less predictable and so the who's and the house are ever more important.

It is a wonderful time to be in the who and how business. In most of our markets, economic growth continues to be solid, albeit at widely different levels. At the same time, a combination of still robust valuations and an uncertain monetary policy are creating real pressure in the C-suite.

And of course, many of our major markets are facing elections this year, sometimes exacerbating already pronounced divisions in the workplace and society. Turning to our financial performance. We are committed to transforming client value into shareholder value, and our results demonstrate this.

In the first quarter, we delivered strong growth on the top line. Adjusted EBITDA margins were solid even with the growing contribution from our recently accretive and attractive acquisitions of Atreus and B4Z. We also maintained a strong financial position, with a pristine balance sheet, which includes no debt. Let me now turn to our key priorities.

While I'm new to Heidrick, I'm no stranger to the challenges faced by corporate leaders around the world or the importance of having the right talent to meet these challenges. As we have worked to set and reset corporate priorities, 2 themes have struck me. First, there is no question that our work serves a huge and growing market.

The importance of developing selling-in capital strategies and effectively executing on them will only grow. Importantly, our brand permission, outstanding client work and the strong relationships we have with the very tops of organizations serves as an entree to expand our scope and create substantial value across the enterprise.

Given the scale and importance of what we do, we have a major opportunity to grow our impact and our value for our clients, our people and our shareholders. Second, we come to market with an incredible and strong collection of assets and expertise to support our growing client base.

We bring a unique set of capabilities built upon a treasure trove of powerful intellectual property and advanced technology to all key dimensions of C-suite leadership. This includes executive search, assessment, succession planning, access to interim support and tools to drive performance through executive development and culture.

Increasingly, we augment the work of our great teams with digital tooling. In a world as complicated as the one we now operate in, we always want to be agilent responding to client needs, but our team is focused on 3 important global objectives. First, to be the most trusted partner to the C-suite and Board.

We will aim to continue growing our search and assessment capabilities and to find new ways to convert this expertise into ongoing client impact and more holistic revenue streams. Second, to help clients master the new world of leadership.

The very nature of leadership is changing and clients need help developing, accessing and enabling talent in new ways. Each of the seismic events we've seen across the past 5 years has reshaped the way leaders must lead and change how companies must develop and enable leaders. The pandemic changed the world of work forever.

The advent of Gen AI has only begun to reshape how companies organize and operate. Ongoing geopolitical dynamics have complicated international strategy for every client.

Existing leaders need new support to lead in this environment to change and grow how they lead and companies need to shape the next generation of leaders and access talent in new ways.

Our Heidrick Consulting and on-demand talent assets are built to help clients in this now more permanently complex world, from leading assessment and development capabilities to helping leaders with performance through cultural change, our Heidrick Consulting platform is well matched to client need.

And our on-demand talent business gives clients a new weapon in their performance arsenal, the ability to engage and leverage new sources of talent in a work world royal by the aftermath of the pandemic and ongoing demographic change. Third, we aim to be a bionic innovator.

We are pleased with the digitization of our business, but understandably not yet satisfied. The needs of our clients and our people and the richness of available technology is changing far too quickly to be satisfied.

The next horizon is compelling as we further develop into a tech-enabled service business and differentiating our services across all lines of business with a diversified portfolio of proprietary data enabled and digital solutions.

We have made important foundational investments such as the Navigator platform, which we believe will allow us to roll out new offers quickly. We've already seen early success with the next-generation enterprise assessment and development platform on Navigator and see more innovation to come.

But this is just the beginning of a commitment to leveraging advances in technology and AI to lift the work of our elite colleagues and mine our rich intellectual property. It's obviously early days for Tom and me, but he, I and our management committee colleagues know there is real work to do to accomplish these objectives.

By doing this, we can drive client and shareholder value. A few early areas of focus stand out for us. loosely, we call them clarify, simplify and amplify. Given our incredible people and wealth of resources or perhaps because of their range, we have a significant opportunity to make Heidrick easy to work for and easy to work with.

Getting this right will require us to first clarify how we operate, so our people can bring the best of Heidrick to bear on every client interaction.

For example, near term, we see an opportunity to tighter offering set of solutions in Heidrick Consulting and be incredibly precise about how we create value for our clients and achieve scale in core areas such as assessments. Second, simplify our message to clients and the market.

Heidrick has an unrivaled richness of expertise and insight, which has grown rapidly for the past several years. As you can imagine, this exceptional breadth of offerings would make it harder for a client to easily access and understand all the ways we can drive performance. Third, amplify the impact of what we do.

We are going to be clear and consistent in telling our story with and for our clients. Done right, this work should enable us to accelerate our strategic impact on clients, grow the business more quickly and expand margins consistently. One last note before I hand the call to Mark.

Nothing we have accomplished or plan to accomplish in the future would be possible without the energy and commitment of our exceptional Heidrick colleagues globally. I recently attended our global consultants conference that wrapped up last week.

It was a powerful experience to be with leaders from across the firm from countries around the world, representing all our businesses and deep expertise in every facet of client problem.

The energy was palpable and the time together not only allowed me to meet many colleagues for the first time in person, but also gave our teams the opportunity to strategize, collaborate and clarify how we can better serve our clients. Any organization that has been a market leader for 7 decades has a secret recipe for success.

In our case, it's not so secret, the exceptional and talented people in our organization and the unique culture they have forged are an unmatched resource for client impact. I'm grateful to do part of it and take very seriously the responsibility to grow our people and nurture and protect our culture of impact.

I will now hand the call over to Mark to provide a detailed review of our financial performance and outlook. .

Search, Heidrick Consulting and On-demand Talent. Adjusted EBITDA of $25.9 million improved slightly from $25.6 million in the first quarter of 2023, and adjusted EBITDA margin was 9.8% compared to 10.7% last year.

I think it's important to call out that the first quarter adjusted EBITDA was primarily impacted by higher general and administrative expenses, which I'll discuss in a few moments as well as costs associated from our Global Consulting conference that took place last week. Excluding the conference costs, adjusted EBITDA margin was 10.4%.

As we stated in past calls, while Atreus and B4Z carry lower margins versus executive search. Nevertheless, given the long-term high-growth businesses, even with lower margins, we expect more aggregate dollars flowing to the bottom line and thus should be EPS accretive. Now let's turn to each of our businesses.

Executive Search revenue increased 6% from the first quarter 2023 to $201 million. Regionally, we saw revenue grow 7% in both the Americas and Europe, while Asia Pacific was down 4%. On a constant currency basis, however, Europe was up 4% and Asia Pacific is essentially flat. Most of our practice groups exhibited growth over the period.

We also saw consultant productivity annualized in the first quarter of $1.9 million compared to $1.8 million on the same basis in the year ago quarter. Importantly, Executive Search generated profitability with adjusted EBITDA of $48.4 million compared to $47.8 million in the same quarter last year or a margin of 24% compared to 25.1%.

In On-Demand Talent, revenue was $38 million, up 22% compared to the first quarter of 2023, driven by the positive impact of our Atreus acquisition. Without the acquisition of Atreus , our revenue would have decreased by 8% as we experienced market slowdown in the quarter as it pertains to our legacy business driven by market dynamics.

As you remember, we have several different offerings within this product line, some of which are not correlated to temporary staffing cycles, but a couple of operatings do and thus are more exposed to those market dynamics. Over time, we expect this exposure to decrease as we deliver faster growth in areas of lesser cyclicality.

Importantly, we're seeing demand increase in the Americas. And in the first quarter, we saw increases in total contract values, reflecting longer duration projects, along with higher extension values. On-demand talent recorded an improved adjusted EBITDA loss of $0.9 million versus a loss of $1.3 million in the first quarter of 2023.

We continue to see on-demand talent as a high-growth opportunity and an important complement to our search business to address our client needs. As we identify, prioritize and execute key projects and programs to more rapidly scale this business, we expect future growth to come from both product and geographical perspectives.

Heidrick Consulting's first quarter revenue grew 46% year-over-year to $26 million, primarily due to the acquisition of B4Z, along with growth of our legacy Heidrick Consulting business, driven by our leadership and culture purpose practices. Backing out the acquisition, we saw our legacy Heidrick Consulting revenue increased 17%.

Overall, Heidrick Consulting posted an improved adjusted EBITDA loss of $2 million versus a loss of $2.8 million in the first quarter of 2023.

We believe we have significant opportunities in our consulting product portfolio to drive a more consistent performance, and we look forward to sharing our progress as we work to increase the profitability and achieve greater scale in the most strategically important parts of this portfolio. Turning to operating expenses.

Including our recent acquisitions, we saw salary and benefits increased 9.8% from the first quarter of 2023. As a percentage of net revenue, salary benefits was 65.8% in the first quarter of 2024 versus 66.4% in the prior year quarter. Variable compensation increased $10.2 million in the quarter, given the increase in production.

Fixed compensation increased $5.4 million versus last year, primarily due to base salary and talent acquisition and retention costs, partially offset by a decrease in retirement benefits. General and administrative expenses increased $7 million to $41.4 million or 15.6% of net revenue versus $34.3 million or 14.3% of net revenue in a year ago period.

The increase versus the year ago period is primarily due to the business development travel, which includes our conference, office occupancy and noncash intangible amortization and accretion from our acquisitions, as we have previously discussed.

Stripping out the costs related to the acquisitions and the conference to get a better sense of our baseline run rate, our G&A was approximately 14.1% of revenue in the first quarter of 2024 compared to 13.8% of revenue in the same quarter last year.

We expect that G&A will remain slightly inflated while the intangible expenses run off over the next 24 to 36 months and come down to a more normalized level of around 14%. Cost of services increased $4.6 million to $27.4 million in the first quarter of 2024 versus $22.8 million in the prior quarter, a 20.1% increase.

This increase was due to the expansion of our on-demand talent business, which typically has approximately 65% to 68% of the segment's revenue and cost of services. Finally, we continue to invest in development of Heidrick Navigator and digital assets across our other business units of Search and On-Demand Talent through R&D spending.

R&D expense for the first quarter was $5.7 million or 2.2% of net revenue versus $5.5 million or 2.3% of net revenue in the first quarter of 2023. Moving to bottom line profitability.

Net income for the quarter was $14 million and diluted EPS of $0.67, which compares to net income of $15.6 million and diluted EPS of $0.76 from the same quarter last year. The primary reason for this decline was a meaningful higher tax rate of nearly 39% this quarter versus 32% last quarter.

This increase was predominantly driven by the nondeductibility of acquisition earn-out costs. For comparative purposes, without the higher tax rate, first quarter 2024 diluted EPS would have been $0.05 higher or $0.72, more in line with last year's quarterly performance.

Moving forward, while we expect our rate in '24 and 2025, to temporarily be around 38%. Once these acquisition costs run off, we expect the tax rate to come back into the low 30% range, assuming no other statutory tax changes.

As we look at our balance sheet, we ended the quarter in a strong cash position of $252.8 million, up $48.1 million from the $204.7 million at the end of March 2023. The year-over-year improvement was mainly driven by payments for the BTG earnout and an Atreus acquisition, which we did not have this year.

This balance, coupled with our $200 million credit line, gives us nearly $0.5 billion of liquidity to execute on our strategic plan and return capital to our shareholders. Moving forward, while we continue to navigate a choppy macro environment, we still see good demand signals across our business.

Therefore, we expect the second quarter revenue to be in the range between $255 million and $275 million. Our guidance contemplates executive search in the Americas to remain strong, moderated from the Q1 levels, coupled with some slowdown in Europe and APAC, given the operating environment.

To conclude, I'd like to thank our teams around the world for a strong quarter and a great start to 2024. We believe we're extremely well positioned to continue to successfully navigate through a rapidly changing global environment.

As always, we remain committed to driving long-term profitable growth and delivering sustainable value to our shareholders. With that, Tom and I will be glad to take your questions. .

[Operator Instructions]. And your first question comes from the line of Tobey Sommer of Truist Securities. .

This is Jasper Bibb on for Tobey. I wanted to ask about Search confirmations. I think, 11% over the fourth quarter historically. I'm pretty sure you get a bit of a seasonal tailwind there sequentially.

So how do you characterize the new business trend versus your expectations for the first quarter?.

Sure. Happy to try to jump on. In terms of the first quarter, yes, I think we were a little bit surprised.

Usually in the fourth quarter, we drop off, as you roughly pointed out, you have in the United States, Thanksgiving November holiday and then globally, you have the other holidays that hit you in December and really the summer becomes more of a shutdown month, so to speak. So Q1 always usually has a pretty good strength to it.

In terms of our expectations, they were -- we came in much better than what we had expected. We're very happy in terms of the strength of the general market that we saw in the Americas. Europe was pretty much spot on in terms of what we expected and specific was a little bit behind what we expected.

So overall, just had a very good sense of what we're seeing. We have similar expectations, which is in our guidance in terms of what we think we'll see in Q2 but I think Q3, as you rightly will know it slows up a bit because the month of all gets in Europe, a lot of people take that time off as well as the U.S. mid-July to end of August.

And then we run right back into Q4, it really kind of slowing down, so to speak, because again, not just the holidays, but because most people, if they have open engagements might want to wait until the bonus runs that kind of take off and curtail those as well as generally in terms of people not really looking at the same time.

So it's just a typical Q4 typical is slow, although.Again, in '21, that didn't hold up, but there was reasons for it. .

Got it. And then curious if you could stratify what Search Demand might look like for CEO and Board searches relative to the rest of the positions you're looking for. .

In terms of the positions or in terms of the market?.

I guess the market would be fair. Yes. .

Yes, I think that's it. So I'd say the board searches are pretty much on their pace of cages that we normally would see in terms of how those are looking. So I don't think we've seen anything in the data that describes to us that it's either higher or lower of what we normally see in market.

CEO practice definitely a little bit stronger than we've seen historically and generally in the market that we're starting to kind of see come through. Well, there's been some pretty good data on there in terms of time and seat as well as aging in the CEO suite.

So we would expect that to kind of continue to have -- we expect it to have good strength as we think through '24. Again, some of the compness in the market can curtail that a bit, but right now, we're not seeing a lot of it at that level.

And I think it's probably, again, other ways downstream when it'll be more on the BP side of it that we're starting to see a little bit more of a slowdown, so to speak, than the sea level at least as of right now. .

Yes. Just to add some color there, Mark. If you think of a CEO who's been in the seat for 5 years today, they've been through a pandemic, a spike inflation, they've been through some stuff.

So there is -- I don't know whether it's dog years or whatever, but CEOs are feeling like they've -- their calendar in chair understates what the work they've had to do in the past cycle. .

Absolutely. .

Got it. Last one for me.

I don't know if you gave any color on R&D spending plans, what you're expecting over the balance of the year, just given where you are with the heavy progress?.

Our expectation is Q1 will maintain its kind of cadence through Q2, 3 and 4 at a similar level. I don't think we're going to see a major slow-up. And remember, it was kind of interesting when we had this conversation a couple of years ago, we'd say normally, you would start to see that kind of curtail itself down.

And we caution that with unless something new happens in the market that we need to invest our time into. And the reason I say that is because AI has become something that we are now obviously seriously putting our thoughts, energy and money behind. So I say that until the next great 1, 2 to 3 years.

I mean, the technology advancement, especially as it applies to Heidrick is pretty cool and how we can use that in terms of gaining leverage into the company, into the business. So right now, I'd say, maintain that cadence, that's probably the right thing to do.

And then some -- whatever the next AI interesting technology development that could be really applicable to our business, we're going to invest in and we think it's really important for our investors to do that and make some open at the same time. .

The other point I'll make there is the same win that complicates our life in terms of making sure we're deploying AI and service to our clients, hits our clients very hard and that they're looking for new roles, new types of leadership, new ways of organic.

So this upheaval certainly has us working hard, but the good news is it does create some secular long-term demand for people to think about the talent they need and how they organize to get after this opportunity. .

Your next question comes from Kevin Steinke with Barrington Research. .

If you just touch on the choppy environment you're seeing in Asia and Europe a bit more, and what's leading to that choppiness. And it sounds like at this point, you expect Americas to be strong, but I guess you'd kind of be on the lookout to have that also start to impact Americas. But just any thoughts on the overall environment overseas in the U.S.

and globally. .

Look, we're incredibly well positioned with great teams in those regions. So we're very -- as you would guess, very close to clients and what's going on there. And there's some real economic shop around the world right now, safety obvious, you have geopolitical events.

You have macroeconomic factors that are swinging around a lot, and those are hitting some markets more than others. We feel great about our position in those markets. We feel great about the teams on the ground.

And we are going to compete for and drive value even in choppy markets.So -- but I'd say on balance, the macro drops a little higher outside the U.S. than it is inside the U.S. right now.

Mark, anything you want to add there?.

[Indiscernible]. Nothing to add. That's great. .

Okay. I may have missed it, but maybe an update on progress with Heidrick Navigator and in addition to that, the kind of the development road map for additional digital products and services in the future. .

That's a great way. That's exactly how we think about the question, which is Navigator is a terrific platform, which, on its own, obviously lots to intersect tightly with key client workflows. And it's built to be a platform on which other digital products can be launched.

So an easy example that Mark talked about was the Enterprise assessment platform. We are -- we now have the ability to start to do assessment at scale, bring our IP to life regularly across broader populations, and that's really, really a great tool.

So beyond that, we're going to -- like anyone else, we probably can introduce new products faster than we can get them in front of our clients. So we're going to be thoughtful and measured around delivering that road map. But right now, we feel very good about the value props we're able to put in front of clients and we're tight.

It's great because it's very consistent with what they expect of us that links us more tightly to their everyday work. .

Okay. Great. And Mark, just on the cost of services line, you talked about that being tied to on-demand talent.

And just at what point do you think you can maybe start to get some expense leverage on that line? Or what would be the catalyst to do so?.

So we started to get a little bit on that, Kevin. So we started to see that it used to be $0.70, that's kind of come down to $0.65. Atreus really kind of helps us achieve I think they've done some really interesting stuff.

I think the question on the table really is, look, how can you really make a meaningful change, move the needle, especially as it pertains to increasing margins of the business, so to speak. And my commentary there is scale is going to help considerably on the bottom line of things, trying to get that EBITDA up in the double digits.

And I think the technology is the other angle, I don't think people should discount that. The more we can evolve both in terms of their CRM and how we can integrate that across everything that we do and make it one CRM because right now, it's been through acquisitions, so we still need to do that.

That's what you're starting to see in some of that R&D line item is really going to change the pace for us.

We've got great vision on Tom Monahan, Tom Murrin, myself, the team, [indiscernible] cetera, really start to sit down a footprint on paper on what we think that's going to have to look like as well as Heidrick consulting as well as in other parts of our business is to come to one platform, one Hedrick, and I think that's going to be important.

I think that's going to get us there. And I don't think it's -- I don't think it's as far as a way as people would anticipate. I mean, again, when you do something like this, you'd expect a couple of years, 2, 3 years of really getting all the bugs worked out, et cetera, and making sure it's up and running and it's been a shame that we want.

And hopefully, it's got a really cool AI component to it. That's the other element that we're trying to think through. I think that all comes together the right way, that's where you're going to see a meaningful shift in that number. .

Okay. And Tom, you articulated a vision of growing the business more quickly and expanding margins consistently. And you mentioned the phrase client-led growth. I know early days, but any thoughts on how that all ties together over the longer term. .

Sure. I mean I expect -- our goal is to grow all our businesses, right? So I think obviously, we have maintaining our status as the most trusted partner to the Board and C-Suite is really important, and that means growing search and tightly linking that to our executive assessment businesses. Those are top of the house businesses.

And we see huge opportunities to grow our on-demand talent and our Heidrick Consulting offer areas. There's a lot going on there. The big simple headline is the client need, we have massive client need. I've never heard a company in my career in business, say, we have all the right leaders in all the right roles doing all the right stuff.

So there's never -- that's the thought I've never heard any thought bubble I've never heard any CEO articulate out loud. And when they look at the drivers of performance, they land invariably on people being the most important element of great performance. So there's huge market demand. We have an exceptional team globally. We have incredible IP.

And our job in leadership is to just more routinely and reliably make it easy for clients to access more and more of that -- our great talent, great advice and great IP as they build their own businesses.

And there's, as I said, through clarifying where exactly we're going to play, simplifying work, so our people can do their jobs more effectively and then amplifying our great stories, we think we can really drive growth in all our businesses. .

Your next question comes from the line of Marc Riddick with Sidoti. .

So I was sort of curious as to with initial views as to when you look into the client mix and industry verticals? Are there any particular that kind of stand out to you as nearer-term opportunities are ones that you feel as though you'd have a better chance of connecting and driving a greater market share with?.

Yes. I would always say all of them because I think we've got tremendous teams in each of our vertical areas. Every -- we have the right to win. We have great teams.

What I would say, I do think what we're seeing more and more often that gives Heidrick even more and more of a right to win is traditional boundaries between industries get eroded a little bit, and therefore, our strength across the board, in example would be fintech or direct-to-consumer technologies or advanced industrial technologies where our ability to bring strength, let's say, in our technology areas, our depth in understanding AI together with that vertical expertise creates a huge winning value proposition.

So I think we look at the world and say, our scale and strength across our verticals enables us to create new combinations and expertise that clients can't get anywhere else.

So I think that will show up everywhere because to state the obvious, in the same way I've never heard a CEO say they have all the right leaders doing all the right things in all the right places.

I've also not -- never heard a client CEO say anything like, yes, we're deploying technology or my leadership team has the right skills and capabilities to deploy technology across all of our platforms and resources.

So we think our scale across areas, our depth in our functional areas, but our ability to collaborate is going to open up tons of new opportunity. .

Excellent.

And then as you join the chair and have the opportunity to meet folks, Were there any particular key takeaway or 2 that you found in the beginning of your tenure that you would say has been a surprise either positively or negatively, I wouldn't expect you to say negatively, but any particular surprises or stand out that have sort of struck you as you've begun your tenure here?.

I mean other than my great CFO partner, right?.

Yes. Upward... .

But you guys knew that. The -- yes, I think probably the big positive surprises to me are our culture is an asset, and this is an incredibly collaborative culture.

And if we think about that to answer my first question was, gee, so often being able to create a cocktail of the important Heidrick assets to meet a client need, whether that's across geographies, across practice areas, across expertise areas and we're bringing together the best search person, the best assessment person in Maria, being able to bridge a client need through on-demand talent, et cetera, that collaborative culture is super, super important.

The second thing is the scale of opportunity, which, again, we're aware of -- if you just -- if you could be a fly on the wall of any leadership team or Board meeting anywhere in the world, 25% to 40% of their time is spent talking about leadership and talent. And it, therefore, creates huge budgets, creates huge opportunities.

And we see this internally is in a world whether what are getting harder and harder to predict, the who's and how's are ever more important. We were looking last week, a couple of weeks at our conference.

We looked at all the kind of IT predictions from mid-2022 and top IT trends and the most important things companies need to be worried about technology. In the middle of 2022, AI didn't show up on any of them. And so our ability to help companies put leadership teams in place, support them, get them working in effective ways.

So they can handle massive volatility and change in the end market is a really unique asset. Third thing I'd say, probably the 2 things that kind of travel together.

One is, we see an opportunity to make life easier for our teams serving clients, but better productizing our offers by putting in place clearer market messages so people know what Heidrick does and can do.

So amping up the volume, simplifying -- clarifying and simplifying on the front end to say how is it easy for someone to understand what Heidrick can do for them and where we can really help and then amplify, which is telling our story ever more lovely so people know to call us first when they have the types of problems we can solve for them.

Basically my 3 big -- all positive surprises. .

There are no questions. I will now turn the conference back over to Tom for closing remarks. .

Thanks, everyone, for dialing in this afternoon and evening. We really appreciate the chance to bring you up to speed on Heidrick & Struggles performance year-to-date and look forward to keeping you up to date as we continue to organize to deliver outstanding client impact and convert that client impact into outstanding shareholder value. .

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect..